The present invention concerns a method and system for the digital automation of the transaction space. Automation of the transaction space includes, in part, automation of supplier fulfillment instructions, special instructions, logistics, shipping coordination, generation of transactional data, necessary reporting, payments and banking in consideration of completed transactions. The parties participating in the transaction space include, first, sellers that digitally transmit point of sale ("POS") data to the system, then the primary order fulfillment company, the shipper, banks and preceding levels of suppliers, manufacturers, shippers and banks. Specifically, the method and system enable digital contracts of these parties to operate together. The digital contracts are drafted, are ratified for usage by the contracting parties, are stored and operate automatically upon the occurrence of certain events. Two or even thousands of contracts may represent the business instructions of the parties for a given product or transaction. When certain events occur, the system identifies the contracts that are associated with the specified transaction. These contracts are linked; then, an event triggers computational activity as specified in the contracts. The various activities of the transaction space for the supply chain are thereby automated. Traditionally, with conventional computing and accounting and with EDI, business is conducted on a transactional basis, not on a contract basis, with computational operations physically located at each entity. Transactional data is transmitted sequentially, from suppliers to manufacturers, up through the supply chain ending at the top with the final seller. With electronic data interchange (EDI), transactions are transmitted electronically; the initiation of a corresponding transaction may be accomplished manually or even mechanically automated. The linkage of parties by EDI has thus far been limited to only two levels of automation, that is invoice generation upon EDI receipt of a product order ("PO"). This system uses contracts to generate new transactional data and to minimize or eliminate the need to exchange transactional data in order to generate new data. Further, the transactional data can be consolidated into report form, thus precluding the need to deliver all transactional data to each party.
A conventional sales architecture provides that an order is placed at a point of sale ("POS"), and the ordered product is eventually delivered to the ordering party. There are a number of significant events and actions, nevertheless, that must occur manually prior to delivery of the product. Most of these events and actions are not traditionally automated. To the contrary, an intense amount of human interaction is conventionally required in order to complete the commercial transaction initiated by the order.
Consider, by way of example, a commercial transaction wherein a buyer places an order at a POS for a particular device. This initiates the seller's action of ordering the device from the supplier. The supplier will then order the device from the manufacturer. In turn, the manufacturer will order the correct parts required to make and deliver the device from various parts suppliers. The manufacturer will pay the various parts suppliers, resulting in the manufacturer's bank transferring funds from the manufacturer's account to the various parts suppliers' accounts at the suppliers' banks, and the parts suppliers will deliver the parts to the manufacturer. Once the manufacturer delivers the manufactured device to the supplier, the supplier will pay the manufacturer. Thereafter, there is a transfer of funds from the supplier's account to the manufacturer's account at their respective financial institutions. The supplier will deliver the part to the seller, resulting in a transfer of funds from the seller to the supplier. Finally, the seller delivers the part to the buyer, resulting in a transfer of funds from the buyer to the seller from their respective accounts. Each of these steps occurs independently and sequentially. Moreover, any particular link in the chain of the commercial transaction will require independent action. Such action may include physical verification of receipt of the goods from a carrier, physical or automated verification of credit, physical authorization of payment, etc. Additionally, inventorying is done by each party in the chain. Each action taken requires some human input, magnifying chance for error. When commercial transactions on a national basis are aggregated, these actions are repeated innumerable times each day.
In another example, consider "back office" applications. "Back office" refers to the work such as accounting and computing used to fulfill orders, to invoice, to log receipts, etc. This has also been denominated the "transaction space." Typical accounting involves many manual procedures including, in part, logging purchase orders, drafting bills of materials, ordering shipping, scheduling shipping, invoicing, recording sales, issuing purchase orders, drafting receivers, receiving bills, recording payables, accounting for these transactions and functions, credit, collections, receivables and payables. As listed here, these represent fifteen manual steps, much staffing of personnel, large volumes of paper and, consequently, the handling and filing of large amounts of paper documents. These steps do not include additional steps of journal, ledgers, financial reports and management analysis.
By using electronic commerce ("EC") and electronic document interchange ("EDI"), the computer of one company may link to the computer of another company. In these conventional EDI systems, a transactional document is exchanged electronically instead of exchanging conventional paper documents. This requires the exchange of large volumes of data, sequentially, from company to company. Moreover, the EDI ordinarily occurs over private networks. Even where there is EDI, each step in a stage of EC requires human intervention, just as in the earlier example of purchasing a device. Therefore, although certain efficiencies are obtained by using EDI, other potentially large efficiencies are not reached.
Lisa Nishimoto, writing for InfoWorld concerning problems besetting automated commerce, reports that "one thorny problem for proponents of electronic commerce on the Internet is: How will states (maybe the federal government) tax the sale of goods and services online." The more that commercial transactions occur via electronic commerce, the more this problem is aggravated.
Conventional components of a commercial transaction system are well known. For example, traditional integrated inventory systems are disclosed in U.S. Pat. Nos. 5,310,997 and 5,434,394 to Roach et al. These patents describe systems for processing merchandise sale transactions, to integrate point of sale and warehouse processing functions, and to enable delivery of merchandise to customers in the shortest possible time. The reach of the integration is highly limited, however, and the concept of integration is not extended to any degree.
It is known in the industry to automate various individual actions in a variety of sales architectures. For example, U.S. Pat. No. 5,362,948 to Morimoto discloses the automation of order placing and receiving operations of traders realized by an on-line system. Similarly, U.S. Pat. No. 5,287,268 to McCarthy concerns accumulating incentive points at points of sale for a consumer from purchases at multiple merchants; U.S. Pat. No. 5,239,462 to Jones et al. relates to real-time approval of a potential borrower; and U.S. Pat. No. 4,920,488 to Filley generally teaches a database system to account for physical inventory.
In addition, much of the hardware used in sales architectures is well known. U.S. Pat. No. 4,912,309 to Danielson et al., which discloses the specifics of a point of sale terminal, is merely one example. There is also available a large number of hardware and software configurations which may globally interconnect a pair of two links in the chain using common protocols.
Furthermore, physically ratifying each step in the process of fulfilling an order is conventionally known. An individual step may be partially automated, as in U.S. Pat. No. 4,887,208 to Schneider et al., which discloses an inventory system including on-line communication between the retailer and the manufacturer enabling confirmation at the purchase stage. Also well-known are individual links, such as banks, suppliers, retailers, included in a supply chain needed for fulfilling a conventional order.
Unfortunately, there has never been an integrated method and system capable of completely automating the commercial transaction throughout the supply chain. Moreover, no system provides for bundling together individual transactions for multiple parties wherein the information and data for fulfilling a commercial transaction are determined substantially simultaneously, rather than sequentially upon occurrence of individual events or for a specified purpose. In addition, no one system elegantly addresses the problem of governmental impositions such as tax.